The sovereign-bond launch, originally planned a couple a years ago but scuttled by the eurozone crisis, was well received by investors, who placed €20 billion in orders. The yield is in the area of 1.85 per cent. The deal gives investors an entry into a new Spanish asset class, while the Treasury will be able to diversify its funding base.
The issuance allows Spain to join a small group of eurozone members - Germany, France and Italy - that sell inflation-linked bonds on a regular basis. Smaller eurozone countries with lower funding needs are unlikely to follow suit, as the issuance of so-called linkers doesn't normally exceed 10 per cent of a country's annual government bond issuance.
Bankia's 10-year bond is likely to offer a yield of roughly 4 per cent, according to bankers working on the sale. Euro-denominated subordinated bonds issued by financial companies yield 2.82 per cent on average, according to a Markit index, showing that investors demand a significant premium for Bankia's debt.
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